internship report modes of investment of islami bank bangladesh limited mohammadpur krishi market...
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i
Internship Report On
Modes of Investment of Islami Bank Bangladesh Limited
Mohammadpur Krishi Market Branch
Shahana Shofi
ID NO. BBA070102072
Major in
Human Resource Management
Date of Submission: 16th January, 2011.
ii
Internship Report On
Modes of Investment of Islami Bank Bangladesh Limited
Mohammadpur Krishi Market Branch
Supervised By
Syed Mustafizur Rahman Chowdhury
Senior Lecturer, MIS
Department of Business Administration
Northern University Bangladesh
Submitted By
Shahana Shofi
ID NO. BBA070102072
Major in
Human Resource Management
Date of Submission: 16th January, 2011.
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Student’s Declaration I am Shahana Shofi, bearing ID BBA070102072, student of BBA program of Northern
University Bangladesh, Major in Human Resource Management; do hereby declare that
the internship report titled ‘Modes of Investment Operation of Islami Bank
Bangladesh Limited at Mohammadpur Krishi Market Branch’ is an original. The
assigned work is done by me for partial fulfillment of my BBA degree, as a part of
academic curriculum. It has not been submitted by me before for any other degree.
Shahana Shofi
BBA 070102072
Major in
Human Resource Management
Department of Business Administration
Northern University Bangladesh
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Certification
This is to certify that Shahana Shofi student of Northern University Bangladesh bearing
ID NO-BBA070102072 under faculty of Business Administration has done an internship
report titled Modes of Investment of Islami Bank Bangladesh Limited at
Mohammadpur Krishi Market Branch under my supervision.
The student is found to be intelligent, sincere and hardworking. The student has put in lot
of work and has also brought forth her views and ideas which are being studied for
implementation at appropriate time. It is a record of research carried out by Shahana
Shofi under my supervision. No part of project and thesis report has been submitted for
any degree, diploma, and title of recognition before.
I wish her every success in her future endeavor.
Supervisor
Syed Mustafizur Rahman Chowdhury
Senior Lecturer, MIS
Department of Business Administration
Northern University Bangladesh
Committee Chairman
Department of Business Administration
Northern University Bangladesh
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Letter of Transmittal
Date: 16th January, 2011
Syed Mstafizur Rahman Chowdhury
Senior Lecturer in MIS
Department of Business Administration,
Northern University Bangladesh
Subject: Submission of Internship Report.
Sir,
I am pleased to submit the internship report as a partial fulfillment of BBA program. I
tried my best to present this internship report on “Islamic Banking System Practiced By
Islami Bank Bangladesh Ltd.” as per your guideline. I tried my best to work sincerely to
cover all aspects regarding the matter. Though I have faced some limitations to prepare
the report due to scarcity of organized data, time limitation and not enough knowledge
about banking sector.
However, if you need any clarification, suggestion, directions for further improvement of
the report, I will be obligate to provide with further explanation. I sincerely hope that you
will appreciate my effort.
Sincerely yours,
Shahana Shofi
ID No-BBA070102072
Major in HRM
Department of Business Administration
Northern University Bangladesh
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ACKNOWLEDGEMENT
First I would like to thank almighty Allah for blessing me with the ability to write and
submit this report. A large number of individuals have contributed directly and indirectly
in the preparation of this report. I am thankful to all of them for their assistant and
encouragement. At first I dedicate all the credits to the Northern University Bangladesh.
Special mention must be made to some persons from whom I have received continuous
support without which it might not be possible for me to complete the report. Among
them Syed Mustafizur Rahamn Chowdhury Senior Lecturer Department of Business
Administration Northern University Bangladesh who has spent his valuable time in
supervising my study very closely and cordially. I cannot deny his suggestions to apply
new indebted to his contribution.
I would like to thanks my gratitude to Md. Shahid Uddin Ahmed (Vice-President &
Manager) at Mohammadpur Krishi Market branch of Islami Bank Bangladesh Ltd. I also
would like to thank Muhtarima Mahmuda Sultana, Senior Principal Officer and faculty
member, Islami Bank Training and Research Academy (IBTRA) of IBBL for her full
support and encouragement. I am also grateful to other personnel of this academy. They
tried their best to manage their valuable time for me in finishing information, as well as
give me suggestion to conduct the study.
I also express my thanks and gratitude to the authority of IBBL to allow me to complete
my practical orientation at their bank and helped me by providing all sorts of information
to prepare of this report. I would like to thank all other officers in this branch to help me
despite tremendous work pressure. I would very much appreciate and sincerely
acknowledge suggestions from friends for improving of this report.
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Executive Summary
This report focuses my experience in Islami Bank Bangladesh Limited. This report has
provided a clear idea about the Modes of investment of Islami Bank Bangladesh Limited.
It contains five main parts. First part is the introduction part. Second part is the profile of
IBBL which gives a clear idea about establishment of IBBL. Third part focuses on
Internship Position and Duties. Fourth part discusses about analysis and learning points
of Mohammadpur Krishi Market Branch. End of the report there have conclusion and
recommendation.
Basically IBBL is an Islamic Bank based on “Islamic Shariah”. It follows the alternative
concept of Islamic Banking which represents unique human approaches to credit and
banking based on profit-oriented economy devoid of interest. In this regard IBBL has
introduced a number of income generating programs for the million of urban and rural
poor. With that objective in view IBBL has formulated a profitable investment option for
the poor a credit program to earn and live in a better society with greater security and
peace.
Modes of investment of Mohammadpur Krishi Market Branch are divided into three
parts. Bai-mechanism, Share-mechanism, and Ijarah-mechanism. This type of investment
also divides into many other parts, like Bai-mudaraba, Bai-muajjal, and Hire purchase
under Shirkatul Meelk etc.
Investment performance of IBBL, Mohammadpur Krishi Market Branch is increasing
day by day. Because most of the people in our country are religious minded and they
want to invest their money according to Islamic Shariah. Moreover people of all walks of
life can easily transact with IBBL comparing to other commercial private banks in the
country.
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ABBREVIATION
AOF : Account Opening Form
AVP : Assistant Vice President
AWCA : Al-Wadiah Current Accounts
BBA : Bachelor of Business Administration
DD : Demand Draft
EVP : Executive Vice President
HPSM : Hire Purchase under Shirkatul Meelk
IBBL : Islami Bank Bangladesh Limited
IBTRA : Islami Bank Training & Research Academy
IT : Information Technology
KYC : Know Your Customer
MDDS : Mudarabah Deposit Deouble Scheme
MMDS : Mudarabah Monthly Deposit Scheme
MMPS : Mudarabah Monthly Deposit Double Scheme
MSDA : Mudarabah Savings Deposit Accounts
MSNDA : Mudarabah Special Notice Deposit Accounts
MTD : Mudarabah Term Deposit
NUB : Northern University Bangladesh
PO : Pay Order
PO : Principal Officer
SBIS : Small Business Investment Scheme
SPO : Senior Principal Officer
SVP : Senior Vice President
SWOT : Strength week opportunities Threats
TT : Telegraph Transfer
VP : Vice President
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Table of Content
Chapter
Name of the Topic Page No:
Executive Summary i-viii
Introduction Part
1
Chapter
One
1.1 Introduction 2 1.2 History behind the report 2 1.3 Objective of the study: 3 1.4 Justification of the study 3 1.5 Methodology of the report: 1.6 Limitations of the study:
4
Chapter
Two
Profile Of the IBBL 5 2.1 Definition of IBBL: 6 2.2 Basic Objective of IBBL 6-7 2.3 Misson of IBBL 7 2.4 Vision of IBBL 7
2.5 Membership of different organization 7
2.6 Present programs of the organization 8 2.7 Characteristics of IBBL 8 2.8 Function of IBBL 8 2.9 Hierarchy Management of IBBL 9
2.10 Hierarchy Management of IBBL:(Muhammadpur
Krishi Market Branch)
10
2.11 Profile of the Bank 11
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Chapter Three
Internship Position & Duties 12 3.1 Description of Job 13 3.2 Specific Responsibilities of the job 13 3.3 General Banking Activities 13 3.4 Foreign Exchange 14
3.5 Investment Activities 15
3.6 Modes of Investment 15-16
3.7 Bai- Mode 16 3.7.1 Bai-Mudaraba 16 3.7.2 Bai-Muazzal 16 3.7.3 Bai- Salam 17 3.7.4 Quard 17 3.8 Share-Mode 17 3.8.1 Mudaraba 17
3.8.2 Musharaka 18 3.9 Ijarah Mode 18
3.9.1 Hire Purchase under ShirkatulMelk
18
3.9.2 Shirkatul Meelk 18
3.9.3Ijarah 18 3.9.4 Sale 19
3.10 Investment Processing of IBBL 19
3.11 Investment Scheme of IBBL 20
Chapter Four
Analysis & Learning Points 21 4.1 Learning Points 22
4.2 Analysis: 22
4.2.1 Bai-Murabaha (General) 23 4.2.2 Bai-Muazzal 23-24 4.2.3 HPSM 24 4.2.4 QTDR 25 4.2.5 Furniture, Fixture& Library 25-26 4.3 (SWOT) Analysis 27
Chapter Five
Recommendations And Conclusion 28-30
References 31
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Chapter-1 Introduction
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1.1 Introduction:
Because of globalization today’s world enhances the opportunities of business and
investment, for economic empowerment modern world put a great effort favoring from
all aspect. As a result, in the modern society commercial banks occupy a position of
economic importance. They play a significant role to meet up the needs of the society
such as large-scale production, capital formation, industrialization, growth of trade and
commerce etc. Islami bank Bangladesh Limited is an unconditional and specialized
financial institution which is first of its kind in South East Asia performs most of the
standard banking service and investment activities on the basis of profit-loss sharing
system conforming to the principles of Islamic Shariah. Islami Bank does not pay interest
to depositor. Instead depositors participate in the profitability of the bank. The Bank
participates in financing long-term projects on the basis of profit-loss sharing instead of
granting credit facilities with interest. IBBL also performs various social welfare
activities through its subsidiary organ named Islami Bank Foundation (IBF). In this
report, I undertake microscopic analysis mainly on Different Investment Modes of
IBBL and sketch picture of the same.
1.2 History behind the report:
Under internship program each student has to prepare a report on the particular topic
related with the organization. According to this requirement, I have already completed
our internship program from IBTRA under Islami Bank Bangladesh Ltd., Muhammadpur
Krishi Market Branch. On the basis of our practical experience as well as theoretical
knowledge, I have completed the report regarding Different Investment Modes of IBBL
The main focus of my study is to analyze the investment strategy and its strength and
weakness. Islami Bank does not lend money or issue securities with fixed interest.
Instead it finance in various schemes approved by Shariah Board to achieve its goal.
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1.3 Objectives and Philosophy of the study:
The objective of the study is to fulfill the requirement of BBA program as well as to gain
practical exposures about investment of IBBL. In line with the broad objective, the
detailed objectives of the study may be spelled out as follows:
To familiar the history and operations of Islami Banking in Bangladesh.
To fined out the overall pictures of investments of IBBL.
To identify strength and weakness of investments of IBBL.
To identify the problems related to investments faced by IBBL.
To recommend actions that may be necessary to redesign the investments of
IBBL.
1.4 Justification of the study:
There are three types of schedule commercial banks are in operation in our economy.
They are Nationalized Commercial Banks, Local Private Commercial Banks and Foreign
Private Commercial Banks. Islami Bank has discovered a new horizon in the field of
banking area, which offers different General Banking, Investments and Foreign Exchange
banking system. So I have decided to study on the topic Different Investment Modes of
IBBL. Because the Internship program of the university is an integral part of the BBA
program. So it is obligatory to undertake such task by the students who desirous to
complete and successfully end-up their BBA degree. This also provides an opportunity to
the students to minimize the gap between theoretical and practical knowledge. During the
internship program the teachers of the Institute are attached to actively and constantly
guide the students. Students are required to work on a specific topic based on their
theoretical and practical knowledge acquired during the period of the internship program
and then submit it to the teacher. That is why we have prepared this report.
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1.5 Methodology of the study:
The study is performed based on the information extracted from different sources
collected by using a specific methodology. This report is analytical in nature. The
methodology is:
Data collection: Source of data of this report can be divided into two categories:
Secondary Sources:
Annual Report of IBBL.
Website.
Relevant books, Research papers, Newspapers and Journals.
Internet and various study selected reports.
1.6 Limitations and restrictions of the report:
From the beginning to end, the study has been conducted with the intention of making it
as a complete and truthful one. However, many problems appeared in the way of
conducting the study. During the study it was not possible to visit the whole area covered
by the bank although the financial statements and other information regarding the study
have been considered. The study considers following limitations:
All the concerned personnel of the bank have not been interviewed.
Lack of in-depth knowledge and analytical ability for writing such report.
Lack of experience.
The time period for this study was short
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Chapter-2 Profile of the
Islami Bank Bangladesh LTD.
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2.1 Definition and Concept of Islamic Bank:
Islamic Bank developed under Islamic frame work, performs most standard banking
service and investment activities on the basis of profit-loss sharing system conforming
the principles of Islamic Shariah. It operates with the objectives to implement and
materialize the economic and financial principles of Islam in the banking arena.
According to Organization of Islamic Conference (OIC), “Islamic bank is a financial
institution whose statutes, rules and procedures expressly state its commitment to the
principles of Islamic Shariah and to the banning of the receipt and payment of interest on
any of its operations.”
According to Dr. Ziauddin Ahmed “Islamic Bank is essentially a normative concept
and could be defined as conduct of banking in consonance with the ethos of the value
system of Islam.”
Although Islamic Bank is a financial institution, its operations and activities shows that
Islamic Bank as a Business firm with Halal transaction within the boundary of Islami
Shariah .The main objective is not only to earn profit but also to make welfare oriented
interest free and exploitation free economy of a country.
2.2 Basic Objectives of Islamic Banks:
The basic objectives of Islamic bank can be pointed out as follows:
To conduct interest free banking systems according to Islamic Shariah.
To make investment through different modes permitted under Islamic Shariah.
To avoid the production of harmful goods and services.
To eliminate socio-economic in-justice.
To establish economic equality.
To eliminate economic exploitation.
To avoid economic instability.
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To avoid evil, wrong and injurious practices from economic life.
To cover the fulfillment of the basic needs of the people.
To realize the full potential of the economy.
To provide safety net for the weak, poor and distressed.
2.3 Mission of IBBL
To establish Islamic Banking through the introduction of a welfare oriented banking
system and also ensure equity and justice in the field of all economic activities, achieve
balanced growth and equitable development through diversified investment operations
particularly in the priority sectors and less developed areas of the country. To encourage
Socio-economic uplift and financial services to the low-income community particularly
in the rural areas.”
2.4 Vision of IBBL
Our vision is to always strive to achieve superior financial performance, be considered a
leading Islamic Bank by reputation and performance.
2.5 Membership of different organization:
Bangladesh Institution of Bank Management (BIBM).
The Institution of Bankers Bangladesh (IBB).
Bangladesh Association of Banks (BAB).
Bangladesh Foreign Exchange Dealers' Association (BAFEDA).
Central Shariah Board for Islamic Banks of Bangladesh.
International Chamber of Commerce- Bangladesh.
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2.6 Present programs of the organization
2.7 Characteristics of Islami bank
It is a financial Institution.
It is a business institution.
It operates its business activities free from interest.
It is run according to rules and regulation formed and amended by Shariah
Council.
It is profit-loss sharing business organization.
It provide loan as Quard Hasana for social welfare.
It gives Zakat on its capital according to Islamic Shariah.
It leads all of its transaction according to Islamic law.
2.8 Function of IBBL
To maintain all types of deposit accounts.
To make investment.
To conduct Foreign Exchange Business.
To extend other banking service.
To conduct social welfare activities through Islamic Banking Foundation.
Islami Bank Bangladesh Ltd.
Deposit Collection Investment General Banking Foreign Exchange Business
xix
2.9 Hierarchy Management of IBBL:
Executive President
Deputy Executive President
Executive Vice President
Senior Vice President
Vice President
Assistant Vice President
Senior Principle Officer
Principle Officer
Senior Officer
Officer
Probationary Officer
Assistant Officer Grade-i
Assistant Officer Grade-ii
Assistant Officer Grade-iii
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2.10 Hierarchy Management of IBBL:
(Muhammadpur Krishi Market Branch)
Vice President
Assistant Vice President
Senior Principle Officer
Principle Officer
Senior Officer
Officer
Probationary Officer
Assistant Officer Grade-i
Assistant Officer Grade-ii
Assistant Officer Grade-iii
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2.11 Profile of the Bank
Corporate Information:
(As on 28st December 2010)
Date of Incorporation 13th March 1983
Inauguration of 1st Branch
(Local Office, Dhaka)
30th March 1983
Formal Inauguration 12th August 1983
Share of Capital
Local Shareholders
Foreign Shareholders
42.64%
57.36%
Authorized capital Tk.10,000.00 million
Paid-up Capital Tk.7413.10 million
Deposit Tk.265193Million
Investment Tk.255178 million
Foreign Exchange Business Tk.277739million
Number of Branches 247
Number of Shareholders 55067
Manpower 10068
Number of SME Centers 26
(Source: www.islmicbankbd.com)
xxii
Chapter-3 Internship Position and Duties
xxiii
3.1 Description of Job I was assigned in the General Banking Section for the first two weeks, after that on site
supervisor transferred me to the Foreign Exchange Section for another two weeks and
later in the Investment Section as an intern. I aided by General Banking In charge,
Investment In charge, Foreign Exchange In charge, Second officer of the branch,
Manager and Vice President of the branch and other ranking officers in a number of
activities.
3.2 Specific Responsibilities of the job
Provide detailed information to the clients about different Deposit Schemes.
Making clear the clients about the difference between profit and interest.
Cross Checking the Y-table of Telegraph Transfer(T.T)
Issue cost memo of Telegraph Transfer (T.T)
In the Investment section I had to deal with the papers and documents needed to
fill up to apply and sanction of an investment procedure of different companies.
I had to mainly deal with the Web Based Cash collection in the Foreign
Exchange Section.
3.3 General Banking Activities Account opening.
Had to provide different information about mudaraba Deposits.
Balance Statement checking.
KYC from fill up.
Handling transfer transaction.
Debit and Credit Voucher Fill up.
Issue cost memo of Telegraphic Transfer (T.T).
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3.4 Foreign Exchange Activities
There is a section called foreign remittance section where customers collect foreign
remittance. I had to deal with two types of remittance: Spot Cash and Web Based Cash.
Web Based Cash: I had to mainly deal with the Web Based Cash collection. The
activities I had to do are as follows:
When a customer comes to collect a Web Based Money at that time I had to
collect a PIN Number and his/her name to download the money from internet. It
is compulsory to bring National ID card or Passport main copy and photocopy to
collect the money and the beneficiary has to come by him/herself otherwise I was
not bound to pay the money. Then I had to provide an application form to the customer to write the remitter’s
name, the country name, PIN Number his/her name, address, cell phone number,
and signature. After that my onsite senior officer downloads the money
information from website and printouts three copies of that to maintain other
formalities.
Then he gives the 3 copies to me to make credit voucher where I had to write the
beneficiary’s name, TT No, date, amount of the money very carefully. And I had
to take signature of the beneficiary beside of the credit voucher.
After that I had to input all the information of the beneficiary in the Web Based
Remittance Register, 1st had to credit the amount in the beneficiary’s account then
again had to debit the money in the same account as the beneficiary is taking the
cash instantly. The client had to give a signature in his/her account column.
Finally I had to check the Application form which filled up by the beneficiary and
staple that with a copy of the web money and his/her photocopy of National ID
card or Pass Port. The credit voucher also had to staple with a copy of the web
money.
xxv
3.5 Investment Activities In this section I had to mainly deal with the papers and documents needed to fill up to
apply and sanction of an investment procedure of different companies. The Bank should
have these documents against each investment of any company for future dealings. The
papers and documents which I had to fill up for each company are as follows:
Clients Application.
Quotation.
Request Letter for an investment.
Authorization Letter.
Demand promissory note.
Demand promissory note Delivery Letter.
Agreement form.
Cash memo.
3.6 Modes of Investment of IBBL, Muhammadpur Krishi Market
Branch When money is deposited in the IBBL, the bank, in turn, makes investments in different
forms approved by the Islamic Shariah with the intention to earn a profit. Not only a
bank, but also an individual or organization can use Islamic modes of investment to earn
profits for wealth maximization. Some popular modes of IBBL’s Investment are
discussed below.
Islami Bank Bangladesh Ltd. operates its investment activities mainly through 3 (three)
mechanisms: (Muhammadpur Krishi Market Branch)
Bai Mechanism,
Share Mechanism
Hire Purchase Under shirkatul Melk
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3.7 Bai- Modes:
Under Bai-Modes of Islami Bank Bangladesh Ltd practiced different kinds of investment
modes. These are given below
3.7.1 Bai-Murabaha (Contract Sale on Profit) “Bai-Murabaha" means sale on agreed upon profit. Bai-Murabaha may be defined as a
contract between a Buyer and a Seller under which the Seller sells certain specific goods
permisIBBLe under Islamic Shariah and the Law of the land to the Buyer at a cost plus
agreed profit payable in cash or on any fixed future date in lump sum or by installments.
The profit marked-up may be fixed in lump sum or in percentage of the cost price of the
goods.
3.7.2 Bai-Muazzal (Deferred Sale) “Bai-Muazzal” means sale for which payment is made at a future fixed date or within a
fixed period. In short, it is a sale on Credit. The Bai-Muazzal may be defined as a
contract between a buyer and a seller under which the seller sells certain specific goods,
permisIBBLe under Shariah and law of the country, to the buyer at an agreed fixed price
payable at a certain fixed future date in lump sum or in fixed installments.
Bai-Murabaha Bai-Muazzal Bai-Salam Istishna’a Quard
Mudaraba Musharaka
Hire Purchase under Shirkatul Meelk
Bai Mechanism
Share Mechanism
Ijara Machanism
xxvii
3.7.3 Bai-Salam (Advance payment) “Bai-Salam” means advance sale and purchase. Bai-Salam may be defined as a contract
between a buyer and seller under which the seller sells in advance in the certain
commodities and products IBBL under Islamic Shariah and the law of the land to the
buyer at a agreed price payable on execution of the said contract and the commodities
and products to the buyer at a future time in exchange of an advanced price fully paid on
the spot. Here the buyer makes an advance payment, but the delivery is delayed until
sometime in the future. Usually the seller is an individual or business and the buyer is the
bank.
3.7.4 Quarde There are different types of quarde in IBBL, these are bellow
Quarde-e-Hasana Term Deposit Recite The word “Quarde” is an “Arabic word” which means loan or credit on advance. The
literal meaning of Quarde is giving “Fungible goods” for use without any extra value
returing those goods. It must follow the principal of equal foe equal return with
homogeneous goods. Fungible goods may be rice, oil, salt, money etc. In banking sector
money is used as quarde. Quarde is Halal by Islam for not to pay any extra or interest in
return.
3.8 Share Modes:
3.8.1 Mudaraba (Investment made by the entrepreneur) The word “Mudaraba” means “travel” for undertaking business The term Mudaraba
refers to a contract between two parties in which one party supplies capital to the other
party for the purpose of engaging in a business activity with the understanding that any
profits will be shared in a mutually agreed upon. Losses, on the other hand, are the sole
responsibility of the provider of the capital. Mudaraba is also known a Qirad and
Muqaradah
xxviii
3.8.2 Musharaka (Partnership based Investment) The word “Musharaka” is derived from the Arabic word “Sharikah” meaning partnership.
Thus the word “Musharaka” means a partnership established between two or more
partners for purpose of a commercial venture participated both in the capital and
management. Thus, it involves different types of profit and loss sharing partnership.
3.9 Ijarah Modes
3.9.1 Hire purchase Under Sirkatul Meelk Hire Purchase under Shirkatul Melk is a Special type of contract which has been
developed through practice. Actually, it is a synthesis of three contracts:
Shirkat
jara
Sale
These may be defined as follows:
3.9.2 Shirkatul Meelk Shirkat means partnership. Shirkatul Melk means share in ownership. When two or more
persons supply equity, purchase an asset, own the same jointly, and share the benefit as
per agreement and bear the loss in proportion to their respective equity, the contract is
called Shirkatul Melk contract.
3.9.3Ijarah
The term Ijarah has been derived from the Arabic words “Air” and “Ujrat” which means
consideration, return, wages or rent. This is really the exchange value or consideration,
return, wages, rent of service of an asset. Ijarah has been defined as a contract between
two parties, the Hire and Hirer where the Hirer (lessee) enjoys or reaps a specific service
or benefit against a specified consideration or rent from the asset owned by the Hire
(lessor). It is a hire agreement under which a certain asset is hired out by the Hire to a
Hirer against fixed rent or rentals for a specified period.
xxix
3.9.4 Sale This is a sale contract between a buyer and a seller under which the ownership of certain
goods or asset is transferred by seller to the buyer against agreed upon price paid / to be
paid by the buyer.Thus Hire Purchase under Shirkatul Melk mode both the Bank and the
Client supply equity in equal or unequal proportion for purchase of an asset like land,
building, machinery, transports etc. Purchase the asset with that equity money, own the
same jointly; share the benefit as per agreement and bear the loss in proportion to their
respective equity.
3.10 Investment Processing of IBBL Generally a bank takes certain steps to deliver its proposed investment to the client. But
the process takes deep analysis. Because banks invest depositors fund, not banks’ own
fund. If the bank fails to meet depositors demand, then it must collapse. So, each bank
should take strong concentration on investment proposal. However, Islami Bank
Bangladesh Limited (IBBL) makes its investment decision through successfully passing
the following crucial steps:
xxx
3.11 Investment Scheme of IBBL Islami Bank Bangladesh Limited came into being to introduce a welfare oriented banking
system and also to establish equity and justice in the field of economic operations based
on the principal and guidelines of Islamic Shariah. Islami Bank Bangladesh Limited
applies eleven schemes for welfare activities.
SL
No.
Schemes Name Implemented Date
01. Household Durable schemes-HDS 27.01.1993
02. Investment schemes for Doctors 11.07.1990
03. Small Business Investment schemes(SBIS) 06.03.1991
04. Agricultural Implements Investment schemes(AIIS) 02.12.1992
05. Housing Investment schemes-HIS 30.11.1994
06. Real Estate Investment Program-REIP 24.08.1991
07. Rural Development schemes-RDS 31.08.1995
08. Transport Investment schemes-TIS 21.05.1995
09. Car Investment scheme-CIS 14.11.1995
10. Mirpur Weavers Investment schemes-MSWIS 09.10.1999
11. Micro Industries Investment scheme-MIIS 18.07.2000
12. Palli Griha Nirman Beniyog Prakalpa-PGNBP 30.01.2010
xxxi
Chapter-4
Analysis and Learning Points
xxxii
4.1 Learning Points It was a great experience to have learnt some important banking, finance, marketing
functions that will help me in future. I could learn how to file the official documents
accordingly and to keep track of those files. This helped me understand the importance of
file management system of Islami Bank Bangladesh Ltd.
I have gathered a very good skill in handling Electronic Integrated Banking
Software (EIBS), Web Based Remittance and Investment which will help me in
my future job carrier.
I also experienced that reimbursement of the expense claims is done in a
systematic manner. Profit distribution, Investment Return collection, Foreign
Remittance handling, Spot Cash Payment are some very useful assignments I
have been involved with during my internship program that help me learn a lot
about different aspects of these areas.
I have learned organizational behavior which will help me to expand my career.
I have also learned to maintain a good relation with the clients which will help me
to develop my career.
4.2 Analysis:
On the basis of partnership business of profit and loss Islami Bank Bangladesh Limited
was established in Bangladesh to operate banking activities avoiding interesting like
other Muslim countries.
It is entirely a new banking system which was adopted for a better change in socio-
economical condition and to make the banking function dynamic By the construction of
capital, production employment opportunities investment and strong economical structure
bank is performing major role to meet up the demand of society.
xxxiii
4.2.1 Bai-Murabaha (General)
Year 2009 2010
Bai-Murabaha(General)
47.3 88.97
Source of Data: Muhammadpur krishi Market Branch (IBBL) Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Bai-Murabaha in 2009 was tk47.3 million and in 2010 was increased tk88.97 million. 4.2.2 Bai-Muazzal
Year 2009 2010 Bai-Muazzal 21.65 35.74
Source of Data: Muhammadpur krishi Market Branch (IBBL)
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Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Bai-Muazzal in 2009 was tk21.65 million and in 2010 was increased tk35.74 million. 4.2.3 HPSM Year 2009 2010
HPSM 231.7 284.33
Source of Data: Muhammadpur krishi Market Branch (IBBL) Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under HPSM in 2009 was tk231.7 million and in 2010 was increased tk284.33 million.
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4.2.4 QTDR Year 2009 2010 QTDR 5.13 22.75 Source of Data: Muhammadpur krishi Market Branch (IBBL) Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the upward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Qtdr in 2009 was tk5.13 million and in 2010 was increased tk22.75 million. 4.2.5 Furniture, Fixture& Library Year 2009 2010
Furniture, Fixture& Library
3.55 3.32
Source of Data: Muhammadpur krishi Market Branch (IBBL)
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Source of Data: Muhammadpur krishi Market Branch (IBBL) This Figure shows the downward trends for IBBL, Muhammadpur Krishi Market Branch, from 2009-2010. Investment under Qtdr in 2009 was tk3.55 million and in 2010 was increased tk3.32 million. IBBL has achieved stable growth and continuous progress to be one of the leading private
sectors Bank of the country.
All activities are conducted on interest free system according to Islami shariah
Investment is made though different modes as per Islami shariah.
Extend socio economics and financial services to individuals of all economics
backgrounds with strong commitment in rural uplift.
Lack of strong initially to explore investment opportunities through research and
markets.
All employees are not expert of online banking system.
Some of the employers try to violate Islami shariah when they deal with
investment.
Most of the employers and employees are not Business graduate/ Master.
Security in bank is not standard.
Some Investment deal is very much slow.
Islami bank lacks efficient manpower.
4.3 Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis Strengths
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Countrywide branch network. Expatriates faith & inclination towards Islamic Banking. Strong base of well-wishers. General support of beneficiaries towards IBBL. Wider network of arrangement. SWIFT arrangements with major Banks. Motivated and experienced human resources.
Weaknesses
Lack of proper automation. Shortage of manpower. Insufficient logistic support. Concentration of remittance operation though a single location. Non-offering special deposit & investment schemes for the expatriates.
Opportunities
New arrangement with some Exchange Houses. Increase in skilled/ semi-skilled expatriates in various countries. On-line banking facilities. Opening branches at the major remittance receiving localities. Enforcement of Anti Money Laundering Act. Floating and attractive Exchange Rate.
Threats
Entering third generation banks to remittance business Unusual exchange rate offered by competitor. Aggressive marketing by some banks. Operation of New Islamic Banks/ Branch
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Chapter-5 Recommendation and Conclusion
5.1 Recommendations
Though Islamic bank is comparatively superior to conventional interest based bank from
various aspects like abolition of interest based loan market, no fixed cost of capital,
stimulation for accelerating saving and capital formation, efficient allocation of
investment, production and profit, easy recovery of investment capital, lower inflationary
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situation, etc. Islami bank has to fight for several obstacles in case of harmonious
operation. Here I have tried to locate some vivid hindrance and suggested accordingly.
Any kind of bank Shariah based or interest based has to operate under regulatory
environment prepared and approved by the government. There are conflicts
between Islami Shariah and general Government rules and banking law. That’s
why Islami bank does not get the opportunity and help from the running law of
government.
Insurance company pools large amount of money, which is mainly invested by
bank. Islami bank does not get benefit from insurance companies directly.
Because insurance companies are not guided by Islami Shariah. So Islami Bank is
not interested to get insurance from that companies that’s why it is necessary to
establish Islami insurance policy.
Islami bank cannot accept securities & bonds from Bangladesh Bank because
these securities & bonds are not well instructed by Islami Shariah. Besides the
conventional banks get these benefits from Bangladesh Bank that helps them to
increase their wealth.
Islami bank lacks efficient manpower. In our country Islami bank spreading very
rapidly but still skilled manpower is not sufficient. Islami banking and Islami
economy must be included in the syllabus of schools and universities so that
Islami educated people can have opportunity to get employed in Islami bank and
the service of Islami bank can be better with the help of these skilled personnel.
5.2 Conclusion:
Islami banking system the collection of invested money is easier that the conventional
banking because Islami bank concerns with the purpose of investment not with only the
invested money. I also think that there is bright future waiting for the Islami banking in
Bangladesh. And IBBL is in a position to go as a catalyst for this development in the
banking sector in Bangladesh. Another thing I have to mention here that the IBBL is
going through the path in which they need to go and as like today it will bring more new
and welfare oriented activities in the banking sector in the years to come. The special
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feature of the investment policy of Islamic Banks is to invest on the basis of profit-loss
sharing system in accordance with the tenets and principles of Islamic Shariah. Earning
of the profit is not the only motives and objectives of the Islamic Bank’s investment
policy rather emphasis is given in attaining social good and in creating employment
opportunities. By concerning Islami Bank and its operations I come to the conclusion that
the investment models of IBBL are more superior to the conventional bank. In
conventional banking system loan is granted on the basis of interest, which is fixed. In
Islami banking system investment is going on with profit-loss sharing system. In this
system no fluctuation comes between growth of economy as well as growth of IBBL. In
Islami banking system it is possible to create balance between money supply and the
production of goods. On the other hand, conventional banking system creates inflationary
problem. In conventional banking system, investment does not ensure employment
opportunity besides Islamic banking system directly work with unemployment problem.
At the time of increasing interest rate, investment decreases and at the same time
unemployment also increases. In conventional banking system interest rate always
fluctuates and events unrest in economy. Besides Islami bank always helps economic
growth. In Islami banking system the collection of invested money is easier that the
conventional banking because Islami bank concerns with the purpose of investment not
with only the invested money. I also think that there is bright future waiting for the Islami
banking in Bangladesh. And IBBL is in a position to go as a catalyst for this development
in the banking sector in Bangladesh. Another thing I have to mention here that the IBBL
is going through the path in which they need to go and as like today it will bring more
new and welfare oriented activities in the banking sector in the years to come.
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REFERENCES Web Sites:
1. IBBLweb site (2006),Aim and Objectives, Retrieved December 30,
2010, at 2.00 pm from http://www.islamibankbd.com/ Objectives.php
2. IBBLweb site (2006), Introduction, Retrieved December 22, 2010, at
6.00 pm from http://www.islamibankbd.com/ introduction.php
3. Bangladesh Bank Website (2007), from www.bangladesh-bank.org
Retrieved December 05, 2010, at 2.30 pm.
4. IBBLweb site (2006),History, Retrieved December 20, 2010, at 6.30
pm from http://www.islamibankbd.com/ History.php
Reports:
1. Annual Report of, 2008-2009. 2. Brushier Published by IBBL on its different invest schemes and
activities.